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                                                       Calendar No. 332
104th Congress                                                   Report

 2d Session                                                     104-231



                February 6, 1996.--Ordered to be printed


Mr. Hatch, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with


                         [To accompany S. 627]

    The Committee on the Judiciary, to which was referred the 
bill (S. 627) to apply the antitrust laws of the United States 
to major league baseball, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.


  I. Text of S. 627, as reported......................................2
 II. Purpose..........................................................2
III. Legislative history..............................................3
 IV. Vote of the committee............................................4
  V. Discussion.......................................................5
          A. Background of baseball's exemption..................     6
          B. General applicability of the antitrust laws.........     7
          C. Impact of exemption on baseball's labor relations...     9
          D. Owners' arguments for special treatment under the 
              antitrust laws.....................................    11
 VI. Section-by-section analysis.....................................14
VII. Cost estimate...................................................15
VIII.Regulatory impact statement.....................................16

 IX. Additional views of Senator Thurmond............................17
  X. Minority views of Senator Specter...............................19
 XI. Minority views of Senator Simon.................................21
XII. Minority views of Senator Brown and Feinstein...................23
XIII.Minority views of Senator Feinstein.............................29

XIV. Changes in existing law.........................................30

                     I. Text of S. 627, as Reported

                        [104th Cong., 1st sess.]

  A BILL To require the general application of the antitrust laws to 
             major league baseball, and for other purposes

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,


    This Act may be cited as the ``Major League Baseball 
Antitrust Reform Act of 1995.''


    The Clayton Act (15 U.S.C. 12 et seq.) is amended by adding 
at the end the following new section:
    ``Sec. 27 (a) Subject to subsection (b), the antitrust laws 
shall apply to the business of professional major league 
    ``(b) Nothing in this section shall be construed to 
          ``(1) the applicability or nonapplicability of the 
        antitrust laws to professional baseball's amateur 
        draft, the minor league reserve clause, the 
        Professional Baseball Agreement, or any other matter 
        relating to the minor leagues;
          ``(2) the applicability or nonapplicability of the 
        antitrust laws to any restraint by professional 
        baseball on franchise relocation; or
          ``(3) the application of Public Law 87-331 (15 U.S.C. 
        1291 et seq.) (commonly known as the Sports 
        Broadcasting Act of 1961).''

                              II. Purpose

    This Committee has long held the view that free market 
competition, protected by the antitrust laws, is the foundation 
of our economic system. Immunity from the antitrust laws is 
appropriate only in very limited circumstances, and only if 
certain precautions are taken. Immunity should be granted and 
maintained only where it is clear that competition will not 
work in a particular industry or market. Moreover, any industry 
that is granted immunity is well advised to adopt the least 
anticompetitive practices possible, in order to preserve the 
fairness of the economic system and maintain its exemption. 
With these principles in mind, the Committee has reviewed S. 
627, the ``Major League Baseball Antitrust Reform Act of 
    The purpose of S. 627 is to affirm that major league 
baseball's owners and players are subject to the Nation's 
antitrust laws. Professional baseball is the only industry in 
the United States that claims an exemption from the antitrust 
laws without being subject to alternative regulatory 
supervision. Yet Congress has never declared professional 
baseball to be exempt from the antitrust laws. Instead, the 
U.S. Supreme Court shielded the owners of major league baseball 
from the antitrust laws through its judicial decisions, 
beginning in 1922. While subsequently finding the exemption to 
be an ``anomaly,'' the Court expressly left it to Congress to 
modify the exemption.
    This legislation, S. 627, will end the anomalous antitrust 
loophole enjoyed by the owners of major league baseball, by 
clarifying that the antitrust laws do apply to major league 
baseball with certain exceptions. Under S. 627, the antitrust 
laws will apply expressly to areas of immediate concern such as 
player relations, competition from new leagues, and 
telecommunications activities that are not within the scope of 
the Sports Broadcasting Act of 1961. However, S. 627 will not 
affect existing law with respect to professional baseball's 
ability to restrain franchise relocation, matters relating to 
the minor leagues, or the statutory provisions of the Sports 
Broadcasting Act.
    The baseball strike of 1994-95--which tarnished the 
national pastime by curtailing the 1994 season and shortening 
the 1995 season--has reemphasized the need to express Congress, 
intent to apply to professional baseball the rules of fair and 
open competition that are followed by all other unregulated 
business enterprises in this country, including all other 
sports leagues. The strike, which started in August 1994 and 
did not end until April 1995, was not prompted by the players' 
demand for more money, but by their lack of any alternative 
when faced with the owners' threats to impose unilaterally 
terms and conditions of employment that could violate the 
antitrust laws. Other professional athletes and similarly 
situated employees have alternatives to striking specifically 
because of these laws. Unfortunately, negotiations were 
unproductive and, to the fans great dismay, the 1994 World 
Series was never played. These failed negotiations achieved 
what the Great Depression, world wars, and scandal could not--
the cancellation of the World Series. The strike continued into 
the 1995 season, which began only after a Federal injunction 
restored the terms of the old agreement. Remarkably, the owners 
and players have yet to reach a new labor agreement. It is 
clearly time to end baseball's antitrust exemption.

                        III. Legislative History

    Many bills have been introduced over the decades in 
response to the Supreme Court's 1922 decision establishing 
baseball's antitrust exemption. During the previous Congress, 
this Committee voted on June 23, 1994, and narrowly failed to 
pass S. 500, which as amended, would have eliminated the 
antitrust exemption for major league baseball as it related to 
labor issues.
    In the 104th Congress, Senators Hatch, Moynihan, Graham, 
and Bingaman introduced S. 415, the Professional Baseball 
Antitrust Reform Act of 1995, on February 14, 1995. On that 
same day, Senators Thurmond and Leahy introduced S. 416, the 
Major League Baseball Antitrust Reform Act of 1995. While the 
two bills had similar goals, the primary difference was that S. 
415 would have overridden the ``nonstatutory labor exemption'' 
in certain circumstances. The Subcommittee on Antitrust, 
Business Rights, and Competition promptly held a hearing on the 
    Senator Thurmond chaired the Antitrust Subcommittee hearing 
on February 15, 1995, at which both S. 415 and S. 416 were 
analyzed. Witnesses included: Senators Hatch, Moynihan, 
Kassebaum, and Graham; Mr. Selig, chairman of the Major League 
Baseball Executive Council; Mr. O'Connor of Morgan, Lewis & 
Bockius; Mr. Rill of Collier, Shannon, Rill & Scott; Mr. Fehr, 
executive director of the Major League Baseball Players 
Association; Mr. Cone and Mr. Murray, both baseball players and 
members of the Major League Baseball Players Association; and 
Mr. Arquit of Rogers & Wells.
    Following the hearing, on March 27, 1995 Senators Hatch, 
Thurmond, and Leahy introduced a compromise bill, S. 627, the 
Major League Baseball Antitrust Reform Act of 1995, which was 
cosponsored by Senators Moynihan and Graham. The legislation 
was referred to this Committee and the Antitrust Subcommittee. 
On April 5, 1995, with a quorum present, the Antitrust, 
Business Rights, and Competition Subcommittee approved S. 627 
by voice vote for full Committee consideration.

                       IV. Vote of the Committee

    On August 3, 1995, with a quorum present, the Committee on 
the Judiciary ordered S. 627 favorably reported by a vote of 9 
to 8, with one member abstaining. In compliance with paragraph 
7 of Rule XXVI of the Standing Rules of the Senate, the members 
of the Committee voted as follows on S. 627:
        YEAS                          NAYS
Hatch                               Grassley
Thurmond                            Specter
Simpson                             Brown
Thompson                            Kyl
DeWine                              Biden
Abraham                             Heflin
Kennedy                             Simon
Leahy                               Feinstein



    Senator Simpson offered an amendment that would have 
maintained the existing antitrust exemption if an independent 
baseball commissioner was appointed in accordance with specific 
procedures. The amendment was not adopted by a vote of 6 to 11, 
with one abstention, as follows:
        YEAS                          NAYS
Hatch                               Thurmond
Simpson                             Specter
Grassley                            Thompson
Brown                               Kyl
Kennedy                             DeWine
Leahy                               Abraham



                             V. Discussion

    Major league baseball has enjoyed an esteemed position in 
this Nation over the last century. Often referred to as 
America's national pastime, the game has been a bond linking 
generations and evokes special memories of family and childhood 
for many.
    Unfortunately, the realities of baseball do not always 
match this perception. The game is, in fact, a lucrative 
business--when not sidelined by labor problems--generating 
billions of dollars in revenues and related income each year. 
With their current antitrust status, the owners may conspire 
and collude without restraint, and they have repeatedly taken 
unfair advantage of their unique legal position. The antitrust 
laws were designed to prohibit the very kind of economic 
practices that exist in major league baseball today.
    The list of those harmed by baseball's antitrust exemption 
is long. Municipalities, minor league owners, prospective 
investors, players, and fans have all been victims of 
professional baseball's anticompetitive practices. It is no 
surprise that the owners' relationship with the players has 
been so contentious; in fact, baseball has been plagued with 
more work stoppages than all other professional sports 
combined. Nor is it surprising that record numbers of fans 
decided to demonstrate their frustration in 1995 by staying 
away from ballparks across the country--overall, the decline in 
attendance is estimated at more than 20 percent.
    As the Committee began its consideration of S. 627, 
Chairman Hatch summarized the need for legislation to resolve 
these problems by stating:

          This bill will bring about sound reforms that ensure 
        that baseball is treated fairly and properly under the 
        antitrust laws. In the long run, our bill will 
        contribute to constructive labor relations between the 
        players and owners, and will subject Major League 
        Baseball to the same treatment under the nation's laws 
        that the other professional sports experience.

    Among groups which have analyzed and support this 
legislation, two are particularly noteworthy. By letter of 
August 3, 1995, the Department of Justice--which has 
enforcement responsibilities over our Nation's antitrust laws--
responded to Senator Leahy, the ranking member of the Antitrust 
Subcommittee, stating that the ``Department supports 
legislation that would narrow baseball's special antitrust 
exemption by applying the antitrust laws to Major League 
Baseball with certain exceptions.'' Likewise, the Section of 
Antitrust Law of the American Bar Association supports S. 627 
because it ``reverses baseball's anomalous antitrust exemption 
and places professional baseball on the same footing as other 
professional sports.''
    At the Committee's markup, Senator Leahy observed: 
``Congress may not be able to solve every problem or heal 
baseball's self-inflicted wounds, but we can do this: We can 
pass legislation that will declare that professional baseball 
can no longer operate above the law that governs all other 
professional sports and commercial activity.''


    Major league baseball's unusual antitrust status began with 
the U.S. Supreme Court's decision in Federal Baseball Club, 
Inc. v. National League of Professional Baseball Clubs, 259 
U.S. 200 (1922). Explaining why the antitrust laws should not 
apply, the Court held that exhibitions of baseball did not 
satisfy the interstate commerce jurisdictional requirement 
because they were ``purely state affairs'' and not ``trade or 
commerce in the commonly accepted use of those words.'' In 
1922, the Supreme Court could not have envisioned the 1993 
World Series, where Canada's Toronto Blue Jays defeated the 
Philadelphia Phillies in a game televised around the world. The 
game the Court sought to protect bears little resemblance to 
the billion dollar industry operating today.
    A series of cases followed the 1922 decision of Federal 
Baseball, in which the Federal courts refused to extend an 
antitrust exemption to any other sport, 1 and held that 
other sports were subject to the antitrust laws. 2 These 
decisions acknowledged the erroneous nature of Federal 
Baseball, but refused to abandon the precedent as it applied to 
    \1\ Radovich v. National Football League, 352 U.S. 445 (1957) 
(professional football); Haywood v. National Basketball Ass'n, 401 U.S. 
1204 (1971) (professional basketball); Nassau Sports v. Peters, 352 F. 
Supp. 870 (E.D.N.Y. 1972) (professional hockey).
    \2\ See, e.g., Dessen v. Professional Golfers Ass'n, 358 F.2d 165 
(9th Cir.), cert. denied, 385 U.S. 846 (1966) (professional golf); 
Washington State Bowling Proprietors Ass'n v. Pacific Lanes, Inc., 356 
F.2d 371 (9th Cir.), cert. denied, 384 U.S. 963 (1966) (professional 
bowling); Amateur Softball Ass'n v. United States, 467 F. 2d 312 (10th 
Cir. 1972) (amateur softball).
    The decision of the Supreme Court in Flood v. Kuhn, 407 
U.S. 258 (1972), repudiated the legal basis of the Federal 
Baseball case and its progeny. The Court correctly acknowledged 
in Flood that its prior decisions which created the exemption 
were now outdated and incorrect. Specifically, the Court found 
that ``[p]rofessional baseball is a business and it is engaged 
in interstate commerce.'' 407 U.S. at 282. Rather than modify 
the exemption it had created, however, the Court avoided the 
issue by holding that ``[i]f there is any inconsistency or 
illogic in all this, it is an inconsistency and illogic of long 
standing that is to be remedied by the Congress and not by this 
Court.'' Id. 3 Without the Supreme Court decisions in 
Federal Baseball and Flood, major league baseball would have no 
arguable claim to antitrust immunity. 4
    \3\ The Court in Flood also held that state antitrust enforcement 
is pre-empted, affirming the appellate court's ironic conclusion that 
the ``burden on interstate commerce outweighs the states' interests'' 
in enforcing their own antitrust laws against baseball. 407 U.S. 284. 
To the extent that the Federal exemption was due to baseball not being 
in interstate commerce and a ``purely state affair,'' however, State 
antitrust laws are the only ones that would apply to baseball.
    \4\ A federal court recently grappled with the Supreme Court's 
Flood decision in Piazza v. Major League Baseball, 831 F. Supp. 420, 
436 (E.D. Pa. 1993). The underlying facts in Piazza concerned the 
efforts of investors to purchase the San Francisco Giants and move the 
team to St. Petersburg, FL. The league thwarted the move, and the 
investors sued. Noting that the Supreme Court in Flood had repudiated 
the legal basis for the decision in Federal Baseball, the district 
court limited the case to its facts and denied the league's motion for 
summary judgment. Specifically, the court found that the reserve clause 
at issue in Federal Baseball and Flood remained exempt from the 
antitrust laws, but that in all other respects baseball was a business 
in interstate commerce and was therefore subject to the antitrust laws. 
The league reportedly settled the suit before trial for $6 million. In 
a related case, the Supreme Court of Florida found the Piazza rationale 
persuasive and adopted it in Butterworth v. National League of 
Professional Baseball Clubs, 644 So.2d 1021 (Fla. 1994). See also 
Morsani v. Major League Baseball, 1995 Fla. App. Lexis 10391 (Fla. 2d 
DCA 1995) (following rationale of Butterworth to reinstate state 
antitrust claims). But see New Orleans Pelicans Baseball, Inc. v. 
National Ass'n of Professional Baseball Leagues, Inc., No. 93-253, 1994 
WL 631144 (U.S.D.C., E.D. La. Mar. 1, 1994) (rejecting Piazza as an 
``impressive dissent from precedent'' and granting summary judgment 
based on existence of antitrust exemption).


    Courts have repeatedly held that the antitrust laws do 
apply to other professional sports, including professional 
football, basketball, and hockey, as discussed above, as well 
as all other unregulated businesses. However, the courts also 
have long recognized that a professional sports league is a 
joint venture whose product--a series of contests leading to a 
championship--could not be obtained if the individual 
franchises or teams were not permitted a high degree of 
cooperation and business coordination beyond that required in 
most other industries.5
    \5\ See, e.g., Mackey v. National Football League, 543 F.2d 606, 
619 (8th Cir. 1976), cert. dismissed, 434 U.S. 801 (1977); National 
Collegiate Athletic Ass'n v. Board of Regents of Univ. of Oklahoma, 468 
U.S. 85, 86 (1984).
    Courts generally review the conduct of a bona fide joint 
venture under the so-called ``rule of reason'' analysis, 
discussed next, which balances benefits against any harm to 
competition, rather than holding the conduct per se illegal 
without analyzing any defense or justification. A second 
important doctrine explained below is the nonstatutory labor 
exemption from the antitrust laws, which applies generally to 
all sports and industries.

1. The rule of reason

    Section 1 of the Sherman Act prohibits contracts, 
combinations, or conspiracies that unreasonably restrain trade. 
15 U.S.C. 1. Legality under the antitrust laws generally 
depends on whether the conduct in question is considered 
``procompetitive'' or ``anticompetitive.'' Actions and conduct 
by joint ventures often have both procompetitive and 
anticompetitive aspects, so legality is determined by balancing 
the beneficial effects on competition against the restraints 
the conduct imposes on competition. This balancing involves 
analyzing the facts peculiar to the business, the history of 
the restraint, and the reasons why the restraint was 
imposed.6 This balancing analysis is known as the ``rule 
of reason,'' and is routinely used by courts in deciding 
antitrust cases involving professional sports.7
    \6\ See, e.g., Chicago Bd. of Trade v. United States, 246 U.S. 231, 
238 (1918); National Soc'y of Professional Eng'rs v. United States, 435 
U.S. 679, 691 (1978).
    \7\ See, e.g., National Collegiate Athletic Ass'n, 468 U.S. at 86; 
Los Angeles Memorial Coliseum Comm'n v. National Football League, 726 
F.2d 1381, 1386 (9th Cir.), cert. denied, 469 U.S. 990 (1984).
    Some professional sports leagues have argued for treatment as a 
``single entity'' for purposes of antitrust analysis, rather than 
individual teams. See, e.g., Los Angeles Memorial Coliseum Comm'n, 726 
F.2d at 1387; San Francisco Seals, Ltd. v. National Hockey League, 379 
F. Supp. 966 (C.D. Cal. 1974). See also Gary Roberts, The Single Entity 
Status of Professional Sports Leagues under Section 1 of the Sherman 
Act: An Alternative View, 60 Tul. L. Rev. 562 (1986); Myron C. Grauer, 
Recognition of the National Football League as a Single Entity under 
Section 1 of the Sherman Act: Implications of the Consumer Welfare 
Model, 82 Mich. L. Rev. 1 (1983). Because there can be no ``contract, 
combination, or conspiracy in restraint of trade'' unless the conduct 
involves two or more separate entities, such treatment would immunize 
sports leagues against most antitrust liability. See Copperweld Corp. 
v. Independence Tube Corp., 467 U.S. 752 (1984). Courts have rejected 
the argument that sports leagues constitute a single entity. See, e.g., 
Los Angeles Memorial Coliseum Comm'n, 726 F.2d 1381; North Am. Soccer 
League v. National Football League, 670 F.2d 1249, 1257-1259 (2d Cir.), 
cert. denied, 459 U.S. 1074 (1982); cf. Chicago Professional Sports & 
WGN v. National Basketball Ass'n, 961 F.2d 667 (7th Cir.), cert. 
denied, 113 S. Ct. 409 (1992) (Judge Easterbrook remanded case and 
encouraged league to raise single entity theory before district court).
    While most restraints of trade are analyzed in terms of 
their reasonableness based on their nature, purpose, and 
effect, practices such as price fixing have such a pernicious 
effect that they are presumed conclusively to be unreasonable. 
Under the per se rule, these ``naked restraints'' on 
competition are deemed to be automatic antitrust violations 
without inquiry into their specific harm or business 
    In sports cases, as noted, the courts typically rely on the 
rule of reason to look at the purpose of any restriction and 
whether it reasonably relates to legitimate objectives or 
whether it is motivated by an anticompetitive intent, such as 
eliminating a competitor from the marketplace. The legality of 
a practice under the rule of reason can only be determined by 
its effect on competition in a relevant market. That is, to 
constitute an antitrust violation, the restriction must result 
in the substantial foreclosure of competition of a particular 
product in a particular geographic area.

2. Nonstatutory labor exemption

    Understanding the broad outlines of the ``nonstatutory 
labor exemption'' is necessary to determine the practical 
impact and effect of S. 627. The nonstatutory labor exemption 
from the antitrust laws applies to all sports and industries, 
regardless of the existence of other antitrust exemptions.
    In an effort to harmonize the nation's antitrust and labor 
laws, Congress has since 1914 protected from antitrust 
challenge the formation of labor unions and their collective 
activities as authorized under the labor laws.8 While the 
statutory exemption is limited to unilateral activities of 
labor unions and employees, the courts have developed a limited 
``nonstatutory'' labor exemption from the antitrust laws that 
applies to concerted activities and agreements between labor 
and nonlabor parties, such as between a union and employers in 
a collective bargaining setting.
    \8\ Clayton Act Sec. 6, 15 U.S.C. 17 (exempts operation of labor 
organizations from the antitrust laws by stating that labor is not an 
article of commerce); Clayton Act Sec. 20, 29 U.S.C. 52; and Norris-
LaGuardia Act, 29 U.S.C. 101-110, 113-115.
    The nonstatutory labor exemption is limited, both because 
the exemption lasts only as long as there is a collective 
bargaining relationship and because all implied exemptions to 
the antitrust laws are strongly disfavored and to be construed 
as being no broader than clearly necessary. See, e.g., 
California Retail Liquor Dealers Ass'n v. Midcal Aluminum, 
Inc., 445 U.S. 97, 105-106 (1980).
    That being said, there are conflicts and disagreements 
among courts and academics over the extent and scope of the 
nonstatutory labor exemption and, in particular, whether a 
union must decertify in order for individual employees to be 
protected by the antitrust laws.9 It is clear, however, 
that at some point the nonstatutory labor exemption ends and 
employees have a right to invoke the antitrust laws. Thus, any 
assertion that the antitrust laws have nothing to do with labor 
relations is incorrect.
    \9\ The Supreme Court has granted certiorari in order to review 
Brown v. Pro Football, 50 F.3d 1041, 1053-54 (D.C. Cir. 1995), which 
adopted a broad view of the nonstatutory labor exemption as protecting 
the entire collective bargaining process, and rejected the players' 
argument that the exemption expires with the formal collective 
bargaining agreement.
    The recent bargaining between the National Basketball 
Association and the NBA Players Association provides an 
instructive example of the importance of the possibility of 
invoking the antitrust laws in the context of labor relations. 
The threat of union decertification led the parties to return 
to the bargaining table and ultimately to a new contract. The 
National Football League has also experienced successful 
application of the antitrust laws to the relationship between 
labor and management in the multiemployer context.
    The Committee need not address or resolve the debate over 
the scope of the nonstatutory labor exemption and whether 
decertification is a necessary prerequisite before players 
invoke the antitrust laws. It is sufficient to recognize that 
the antitrust laws play a role in the labor-management context, 
and S. 627 will ensure that the same rules apply to baseball as 
to all other sports and industries.

          c. impact of exemption on baseball's labor relations

    On August 12, 1994, major league baseball experienced its 
eighth baseball work stoppage since 1972--more stoppages than 
in professional basketball, football, and hockey, combined. The 
strike undeniably has had an impact on this legislation. For 
many supporters of this legislation, the strike provided the 
motivation to seek modification of baseball's anomalous 
antitrust exemption. On the other hand, among those who defend 
the current exemption, the strike provided a reason to take no 
action. Senator Thurmond discussed the effect of the strike 
during his subcommittee's hearing on February 15, 1995:

          Some Members of Congress believe that we should not 
        get involved during the current strike, while other 
        Members have asserted that in the absence of a strike 
        there is no need for the Congress to take action on 
        this issue. Whether there is a strike or not, it is my 
        belief that it is proper for the Congress to consider 
        this antitrust issue as a matter of public policy. The 
        Congress has considered baseball's antitrust exemption 
        in the past, including serious attention by the Senate 
        Judiciary Committee last year, prior to the current 
        strike. I intend to continue working on this issue, 
        even if the strike were to end today.

    This most recent strike ultimately led to the cancellation 
of the remainder of the 1994 regular season and the World 
Series. The 1994-95 strike was the longest in professional 
sports history, and the only sports work stoppage to result not 
only in the complete loss of postseason play, but to carry over 
into the next season. The strike caused immeasurable emotional 
and financial damage to professional baseball and the country, 
as has been noted by the media and fans. This course of events 
has crystallized for the public the peculiar tendency of 
professional baseball to resort to strikes and lockouts as a 
means of resolving labor disagreements--a result, in large 
measure, of its judicially granted antitrust exemption. In 
testimony before the Antitrust Subcommittee, Mr. Arquit 
explained the impact of baseball's special antitrust status on 
labor relations as follows:

          At present, because of the baseball exemption, owners 
        can act in concert to impose conditions on players, 
        even in the absence of the nonstatutory labor 
        exemption. Knowing that they have the legal freedom 
        ultimately to play this trump card, the owners have 
        less incentive to negotiate seriously at the early 
        stages of the process. In contrast to the Congressional 
        policy favoring collective bargaining, as embodied by 
        the National Labor Relations Act, the baseball 
        antitrust exemption encourages exactly the opposite 
        conduct by owners: protracted collective bargaining, 
        leading precisely to impasse. Given the jagged 
        interface between antitrust and labor relations created 
        by the exemption, the acrimonious history of collective 
        bargaining in the context of Major League Baseball 
        comes as no surprise.

    The facts leading up to the strike demonstrate its 
connection to baseball's antitrust exemption, for baseball 
players faced a choice that would never be faced by any other 
professional athlete or similarly situated employee. In 1993, 
even though the collective bargaining agreement in major league 
baseball had expired, the owners promised the players that they 
would not unilaterally implement new terms of employment in the 
off-season. Consequently, there was no work stoppage. In 1994, 
however, the owners would not make the same promise. If no 
agreement was reached between the owners and players before the 
1994-95 off-season, then the owners could unilaterally attempt 
to change the terms of employment before the period for signing 
contracts for the 1995 season.10
    \10\ Labor law permits the major league baseball owners, as it does 
other employers and owners in other sports, to change the terms of 
employment at an impasse in the negotiations.
    The difference between baseball and other sports is that 
other athletes have the option of challenging new terms of 
employment under the antitrust laws.11 Baseball players, 
having no such option, are forced to either accept the new 
conditions or strike. Mr. Fehr discussed this dynamic at the 
February 1995 hearing:
    \11\ As discussed above, players in other sports might have to 
decertify their union to be able to bring an action in court, but the 
option remains nonetheless.

          When parties sit down at the negotiating table they 
        do so fully knowledgeable of the rights and obligations 
        of the other side. In the case of baseball, when the 
        owners sit down at the table they look across the table 
        at athletes who they believe, if negotiations break 
        down, have two and only two options--accept their offer 
        or strike. In any other sport, when the owners sit down 
        at the bargaining table they look across the table at 
        athletes who they know, if negotiations break down, 
        have three options--accept their offer, strike, or 
        exercise their rights under the antitrust laws.

    As a result, the players chose to strike in August 1994 in 
an attempt to force negotiation of a new collective-bargaining 
agreement during the season. Unfortunately, negotiations were 
unproductive and on December 22, 1994, the owners implemented 
new terms of employment. The strike continued, as players 
refused to sign contracts under new terms that were less 
favorable to the players than those in the expired collective-
bargaining agreement. The remainder of the 1994 season was 
lost, including the first cancellation of the World Series. The 
1995 season began only after a Federal judge issued an 
injunction restoring the terms of the old agreement.12 
While the strike has ended, the dispute continues, as no labor 
agreement has been reached. This legislation would help resolve 
baseball's labor problems. As Chairman Hatch emphasized at the 
Committee's markup, S. 627 ``does not impose a big-government 
solution to baseball's problems. On the contrary, it would get 
government out of the way by eliminating a serious government-
made obstacle to resolution of the labor difficulties in 
    \12\ Silverman v. Major League Baseball Player Relations Comm., 880 
F. Supp. 246 (S.D.N.Y.) (National Labor Relations Board had reasonable 
cause to believe that the owners' unilateral actions constituted an 
unfair labor practice), aff'd, 67 F.3d 1054 (2d Cir. 1995).
    Arguments that Congress should not interfere in ongoing 
labor negotiations are unconvincing when there are no 
significant negotiations in progress. As Chairman Hatch said 
during the Committee markup: ``There are no meaningful 
negotiations underway. The players made their last proposal on 
March 30, 1995, and the owners have not made a counterproposal. 
Indeed, the owners suspended negotiations for 14 weeks after 
the March 30 proposal.'' In light of this record, the Committee 
believes that S. 627 could provide the incentive to bring both 
parties back to the negotiating table to resolve a labor 
dispute that threatens the very future of the game.

  d. owners' arguments for special treatment under the antitrust laws

    The Committee views antitrust exemptions with skepticism, 
because free market competition, protected by our antitrust 
laws, forms the foundation of our economic system. As with any 
other group advocating an antitrust exemption, the burden of 
persuasion lies with the owners, for an exemption should be 
maintained only so long as it serves the public interest. In 
reviewing the owners' arguments, it is important to note that a 
number of the potential concerns raised by the owners are not 
implicated by S. 627, for the legislation does not affect the 
application of the antitrust laws to franchise relocation 
decisions or the relationship of the major leagues to the minor 

1. Baseball is not a business

    The rationale for professional baseball's judicially 
created exemption from the antitrust laws in the Federal 
Baseball case was that professional baseball was not a business 
in interstate commerce. 259 U.S. at 208. It has long been 
recognized by the Court, however, that such a proposition is no 
longer true. Flood, 407 U.S. at 282. It is now indisputable 
that major league baseball not only involves interstate 
commerce, but constitutes a significant interstate financial 
enterprise, generating revenues and related economic activity--
when not on strike--of billions of dollars a year.
    Despite the size and financial impact of professional 
baseball, its owners have long asserted that their industry is 
notable for its lack of profitability. Prior to the recent 
strike, for example, owners had predicted industrywide losses 
of some $100 million for the 1994 season. It is impossible to 
verify assertions of economic losses due to the lack of 
financial disclosure by the owners, as well as the multiplicity 
of revenue sources which may benefit owners apart from the team 
itself. Of course, profitability is not a factor in determining 
whether a particular enterprise is engaged in interstate 
commerce or should be subject to the antitrust laws.

2. Effect on the minor leagues

    Owners argue for continuation of professional baseball's 
antitrust exemption on the basis that it is necessary to 
preserve the minor league system. At the Antitrust Subcommittee 
hearing, Mr. Selig asserted that:

        * * * the exemption preserves and enhances our Minor 
        League system throughout the United States, allowing 
        millions of fans the opportunity to watch professional 
        baseball who would otherwise be deprived of that 

    Currently, most of the various minor league teams are bound 
to major league affiliates. This relationship is governed by 
the Professional Baseball Agreement, under which the major 
league teams substantially contribute to the payment of minor 
league player costs. The owners of the major league and minor 
league baseball clubs assert that if the antitrust laws applied 
to baseball, the major leagues would reduce or eliminate this 
``subsidy'' payment. The owners further argue that certain 
aspects of the operation of minor league baseball, such as its 
reserve clause (by which players are bound to teams for up to 
6\1/2\ years), would be susceptible to legal attack under the 
antitrust laws. Mr. Rill stated at the Antitrust Subcommittee 
hearing that:

          If the antitrust exemption is repealed, the continued 
        use of the minor league contract would very likely 
        result in challenges similar to those that wheeled 
        around the majors' reserve clause. * * * Without the 
        protection of the minor league contract, [major league] 
        clubs would not invest the hundreds of millions of 
        dollars necessary to operate the minor league system.

    In addition to the usual skepticism with which claims for 
antitrust protections are greeted, many commentators and 
Members of Congress have questioned the owners' sincerity in 
asserting a need for special treatment to protect the minor 
leagues, in light of the owners' own threats to the minor 
leagues. For example, in the midst of contract negotiations in 
1990, the owners threatened to do away with the minors 
altogether.13 As the current agreement with the minor 
leagues comes up for renegotiation, there is no certainty that 
the relationship will continue as it has in the past regardless 
of what happens to baseball's antitrust exemption.
    \13\ The Associated Press reported that the ``chief negotiator for 
the major leagues said the commissioner's office would begin 
discussions to start new minor leagues and clubs outside the * * * 
current minor league governing body.'' Ronald Blum, AP Sports News, 
Lexis, AP File (Nov. 18, 1990); ``Majors, Minors Can't Agree,'' 
Sporting News, Nov. 26, 1990, at 37 (major league baseball sending out 
new franchise applications and would abandon attempts to reach 
agreement with minor leagues).
    More importantly, the Committee has elected to leave the 
law as it currently exists with regard to the minor leagues. 
The legislation expressly states in section 2 that it shall not 
be construed to affect ``the applicability or nonapplicability 
of the antitrust laws to professional baseball's amateur draft, 
the minor league reserve clause, the Professional Baseball 
Agreement, or any other matter relating to the minor leagues.'' 
At the Antitrust Subcommittee hearing, Senator Thurmond 
explained the importance of maintaining the status quo for the 
minor leagues:

          Protecting the current relations with the minor 
        leagues is important to avoid disruption of the more 
        than 170 minor league teams which are thriving 
        throughout our Nation. This is a priority which other 
        Members and I have clearly expressed.

    Despite the unambiguous language of the bill, opponents of 
the legislation have continued to maintain that it might harm 
the minor leagues. The Committee has asked repeatedly for the 
input of the minor leagues, to determine if the proposed 
statutory language is insufficient to preserve current law. 
However, the minor league owners have proposed no changes to 
the language of the bill.

3. Effect on franchise relocations

    Those defending the antitrust exemption also contend that 
it enables professional baseball to protect local communities 
and fans against abandonment by teams seeking more lucrative 
venues. Major league baseball does enjoy a good record of 
franchise stability, as least compared to other leagues. The 
bill expressly provides that it shall not affect ``the 
applicability or nonapplicability of the antitrust laws to any 
restraint by professional baseball on franchise relocation.'' 
It is the Committee's intent that the status quo of the law 
concerning franchise relocation remain in place. Thus, S. 627 
would have no impact on baseball's current ability to prevent 
franchise relocation.

4. Effect on broadcast relationships

    Another concern voiced with respect to application of the 
antitrust laws to professional baseball is that the laws might 
unreasonably intrude upon the owners' ability to negotiate 
jointly national broadcast contracts. The Sports Broadcasting 
Act of 1961 addresses that concern, and applies to professional 
baseball. 15 U.S.C. 1291 et seq. The Sports Broadcasting Act 
provides a limited antitrust exemption to enable the member 
clubs of professional sports leagues to jointly pool their 
separate rights in sponsored telecasting of their games to sell 
to a purchaser.
    To further ensure that baseball comes within the Sports 
Broadcasting Act, S. 627 provides that the legislation shall 
not be construed to affect ``the application'' of the Sports 
Broadcasting Act. Thus, any congressional repeal of baseball's 
judicially created antitrust exemption would not prejudice 
professional baseball's ability to negotiate jointly such 
agreements with the networks. Major league baseball would be in 
the exact same position as the other major professional 
    \14\ With respect to local broadcast rights, application of the 
antitrust laws to major league baseball would prevent unreasonable 
restraints of trade from being imposed by the league on individual 
teams. Well-established precedent limits a sports league's latitude in 
abusing its local broadcast market. See Chicago Professional Sports 
Ltd. Partnership v. National Basketball Ass'n, 961 F.2d 667 (7th Cir.), 
cert. denied, 113 S. Ct. 409 (1992) (the Chicago Bulls--owned by Jerry 
Reinsdorf, coowner of the Chicago White Sox--successfully challenged an 
NBA rule limiting the number of games ``superstation'' WGN could 
carry). See also National Collegiate Athletic Ass'n, 468 U.S. 85 (NCAA 
rule restraining member schools in the number of games they could 
contract to broadcast held unlawful). There is no reason to conclude 
that baseball cannot live with the same rules that govern the other 
professional sports leagues. Indeed, one Federal court has held that 
baseball's exemption is inapplicable to local broadcasting. Henderson 
Broadcasting Corp. v. Houston Sports Ass'n, 541 F. Supp. 263 (S.D. Tex. 

5. Role of the baseball commissioner

    Some have argued that professional baseball need not be 
subject to the antitrust laws, because of the existence of a 
strong and independent commissioner. Even if the Committee 
accepted the unique argument that private regulation could 
suffice to justify an antitrust exemption, examination of the 
facts clearly reveals that baseball's commissioner has not been 
characterized by ``strength'' and ``independence.'' Major 
league baseball has been operating without an even nominally 
independent commissioner since Fay Vincent's departure in 1992.
    The owners recently weakened the powers of the vacant 
commissioner's office through the actions of a Restructuring 
Committee. Previously, the commissioner had authority to take 
any and all actions deemed to be in the ``best interests'' of 
the game. The recommendations recently adopted by the 
Restructuring Committee, however, will prevent future 
commissioners from using the ``best interests'' powers with 
respect to a list of issues, including: the expansion, sale, 
and relocation of teams; scheduling; interleague play; 
divisional alignment; and revenue sharing among owners. The 
commissioner is also explicitly prohibited from using the 
``best interests'' powers with regard to collective bargaining 
matters. After reviewing the changes the owners made to the 
commissioner's office, former commissioner Peter Ueberroth 

          Basically, the commissioner seems to have no 
        portfolio, power or job. * * * I think the changes 
        dramatically change the position. There will be the 
        appearance of more responsibility, but substantially 
        less authority. That's the recipe for a non job.

The commissioner would have no power, for example, to prevent 
or end a play-stopping decision by the owners to stage a 
lockout of players over collective bargaining issues.

                    VI. Section-by-Section Analysis

    Section 1 states the bill's short title, the ``Major League 
Baseball Antitrust Reform Act of 1995.''
    Section 2 of the bill amends the Clayton Act to add a new 
section 27. Section 27(a) removes the judicially created 
antitrust exemption for professional baseball and provides that 
the antitrust laws shall apply to the business of professional 
baseball as they apply to all other professional sports. The 
phrase ``the antitrust laws shall apply'' is intended to 
incorporate the entire jurisprudence of the antitrust laws, as 
it now exists and as it may develop. In so applying the 
antitrust laws, the various judicial doctrines which have 
developed over the years and now apply to other professional 
sports leagues would, depending on the applicable facts, apply 
to professional baseball.
    S. 627 clarifies that major league baseball's owners and 
players are subject to the Nation's antitrust laws. The 
legislation was specifically drafted so that it would not 
implicate issues relating to other activities, such as 
franchise relocation or the operation of the minor leagues. The 
bill clarifies the law at the major league level. While it is 
far from clear as a public policy matter that clarification of 
the antitrust laws as they apply to the minor leagues should be 
omitted from this legislation, S. 627 is nonetheless 
specifically limited to the major leagues.
    New section 27(b)(1) of the Clayton Act states that 
subsection (a) does not affect the applicability or 
nonapplicability of the antitrust laws to professional 
baseball's amateur draft, the minor league reserve clause, the 
Professional Baseball Agreement, or any other matter relating 
to the minor leagues.
    New section 27(b)(2) of the Clayton Act likewise states 
that subsection (a) does not affect the applicability or 
nonapplicability of the antitrust laws to any restraint on 
franchise relocation by professional baseball. Thus, both 
subsections (b)(1) and (b)(2) leave the law as it is, and as 
the courts may interpret it in future cases.
    New section 27(b)(3) of the Clayton Act provides that the 
legislation will not affect the application to professional 
baseball of the Sports Broadcasting Act, 15 U.S.C. 1291 et 
seq., which explicitly permits the owners in sports leagues to 
pool their separate rights in sponsored telecasting of their 
    There is no language in the Committee-approved S. 627 that 
would grant baseball players any rights not enjoyed by athletes 
in other professional sports. The availability of antitrust 
remedies as a last resort has made a positive contribution to 
resolving several labor disputes experienced in other 
professional sports, and there is no reason why baseball 
players and fans should not benefit from these alternatives as 
    The Committee wishes to make clear that by supporting these 
particular modifications of baseball's judicially created 
antitrust exemption in S. 627, it does not intend to imply that 
more comprehensive change is not also justified--or to imply 
that the courts should not act decisively themselves to limit 
further baseball's exemption in appropriate cases. Indeed, a 
Federal court and the highest court of a State have already 
taken such action. Piazza, 831 F. Supp. 420; Butterworth, 644 
So. 2d 1021.

                           VII. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, August 8, 1995.
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed S. 627, the Major League Baseball Antitrust Reform Act 
of 1995, as ordered reported by the Senate Committee on the 
Judiciary on August 3, 1995. CBO estimates that enacting S. 627 
would result in no significant costs to the federal government 
or to state or local governments. Also, enacting this bill 
would not affect direct spending or receipts. Therefore, pay-
as-you-go procedures would not apply.
    S. 627 would remove major league baseball's current 
exemption from antitrust laws, except that it would retain the 
antitrust exemption for minor league baseball and for decisions 
regarding the relocation of major league franchises. By 
removing the antitrust exemption under these circumstances, 
this bill would allow the players under certain circumstances 
to challenge in federal court certain decisions by the owners. 
Enacting S. 627 would impose additional costs on the U.S. court 
system to the extent that additional antitrust cases are filed. 
However, CBO does not expect any resulting increase in caseload 
or court costs to be significant.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susanne S. 
                                           June E. O'Neill,

                   VIII. Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee concluded that no 
significant additional regulatory impact or impact on personal 
privacy would be incurred in carrying out the provisions of 
this legislation. After due consideration, the Committee 
concluded that enactment of the Act would not create any 
significant additional paperwork.

    It has been a pleasure to work with Chairman Hatch on S. 
627, the Major League Baseball Antitrust Reform Act of 1995, 
during this Congress. I join in the majority report, and wish 
to emphasize a few key points on this important issue.
    First, the Antitrust, Business Rights, and Competition 
Subcommittee s hearing on ``The Court Imposed Major League 
Baseball Antitrust Exemption,'' which I chaired in February 
1995, was vital to provide the foundation for this legislation. 
While those who oppose the bill assert that additional analysis 
is needed, I believe we achieved the goal of providing a 
balanced and fair hearing to both those who favor baseball's 
antitrust exemption and those who oppose it. Moreover, both the 
Senate and the House of Representatives have previously held 
numerous hearings on this issue. Although the antitrust aspects 
of baseball's special exemption are complex, the issue does not 
suffer from lack of public hearings.
    Second, opponents of this legislation continue to dwell on 
whether the Congress should get ``involved'' in baseball's 
antitrust exemption, given that a new labor agreement has not 
been reached despite the end of the strike. However, the 
Congress has played an important role in baseball's antitrust 
exemption simply by its inaction. The Supreme Court has long 
viewed as outdated the reasoning underlying its decision 
creating baseball's exemption in Federal Baseball Club, Inc. v. 
National League of Professional Baseball Clubs, 259 U.S. 200 
(1922), yet has steadfastly maintained that the solution should 
come from Congress. Flood v. Kuhn, 407 U.S. 258 (1972). Thus, 
the Congress is involved even if it fails to act, as I stated 
at the Antitrust Subcommittee markup of S. 627 on April 5, 

          As long as the special antitrust exemption remains in 
        place for baseball, the Congress is involved in the 
        sport in a way that it should not be. The Congress has 
        an ongoing impact on the sport simply by permitting the 
        special exemption to remain long after the factual 
        basis for it has disappeared.

This bill is not a matter of choosing between owners and 
players--for both groups are responsible for baseball's labor 
problems--but exercising the responsibility of the Congress to 
legislate an end to the judicially created exemption which the 
Court itself has long held to be an anomaly.
    Finally, opponents assert that S. 627 would be harmful to 
baseball's ability to control franchise relocation, despite 
language in the bill expressly providing that it shall not 
affect ``the applicability or nonapplicability of the antitrust 
laws to any restraint by professional baseball on franchise 
relocation''. In introducing S. 627, I stated in the clearest 
possible terms that the legislation maintains the status quo 
for franchise relocation, although I noted ``that it may be 
worthwhile reviewing the franchise relocation issue as it 
relates to all professional sports.'' Relocation is a 
significant issue to all professional sports, as illustrated by 
the events of the last year in the National Football League. As 
I indicated at my subcommittee's February hearing, legislation 
may be desirable to protect objective franchise relocation 
rules in professional sports. Nonetheless, S. 627 would have no 
impact on baseball's current ability to control franchise 

                                                    Strom Thurmond.

    I have been involved in sports antitrust issues since 
coming to the Senate. Franchise relocation, protection for 
smaller market teams, revenue sharing have all been issues of 
concern to me, and all implicate the antitrust laws. Like many 
Americans, I have been a sports fan since I was a child. I was 
especially a baseball fan. My current perspective, however, is 
not just a fan's. As a legislator, I must look at the numerous 
issues affecting sports and public policy, from intangible ones 
that interest fans to the very tangible economic issues that 
drive professional sports today. After carefully weighing all 
the relevant issues, I must oppose S. 627 at this time.
    Despite the successful completion of the 1995 baseball 
season, there is still no agreement between the players' union 
and the major league owners. The underlying issues, which have 
caused several strikes and lockouts over the past several 
years, most notoriously the strike that began during the 1994 
season, causing the cancellation of the World Series, have not 
been resolved. The players are free to strike again, and the 
owners retain the option of locking the players out. Even as 
free agents are signed and the ``hot stove'' league is in full 
swing, the 1996 season is threatened by this failure of the 
parties to reach a collective-bargaining agreement.
    Whatever the merits of eliminating major league baseball's 
broad, judicially created exemption from the antitrust laws, 
Congress should not act while the labor situation remains 
uncertain. Any action we take is certain to be viewed as 
favoring one side to the dispute or the other. In such 
instances, Congress acts best when it does not act at all. The 
complex labor problems that have characterized baseball for the 
past years ought to be resolved by the parties without 
congressional interference.
    I am particularly concerned with this legislation because 
it will not achieve one of its primary purposes, that of 
resolving baseball's labor strife. This is a complex time for 
labor relations in professional sports. The professional 
football players' union was decertified in 1989. In the spring 
of 1995, the professional basketball players' union faced a 
serious internal struggle over whether to be decertified, and 
the National Basketball Association locked out the players. 
These matters were finally resolved with the adoption of a new 
collective-bargaining agreement. Even after the agreement was 
struck, however, some union members took the union to court. In 
hockey, last season began with a players' strike against the 
National Hockey League.
    Football, basketball, and hockey do not enjoy an exemption 
from the antitrust laws. Given the labor relations records of 
these other professional sports, there is no reason to believe 
that the existence of major league baseball's antitrust 
exemption is the reason for baseball's labor relations 
problems. Thus, Congress should not intervene to no purpose 
while there is no contract between the players' union and the 
    The problems faced by baseball and these other sports 
reflect a variety of factors. Experts cannot agree on solutions 
to the problems that confront sports. Some argue that 
baseball's problems are especially acute because of the 
exemption from the antitrust laws, which makes baseball less 
susceptible to market forces. Others argue that the antitrust 
exemption is irrelevant to baseball's problems. I am not able 
to say which side has the better of the argument, but the labor 
problems encountered by other professional sports leagues makes 
me skeptical that eliminating baseball's antitrust exemption 
would have a salutary effect on its labor relations.
    I do generally agree with the supporters of this bill that 
exemptions from the antitrust laws are bad public policy. 
Baseball, however, has such an exemption. Expectations and 
reliance interests are based on that exemption. Whether or not 
that exemption ought to be retained, I believe strongly that 
given the current state of play, it would be a mistake for 
Congress to enact this bill. This bill would only upset the 
current situation, making it less likely that the parties to 
baseball's labor strife will be able to resolve their dispute 
between themselves. We should not lose sight of the fact that 
voluntary collective bargaining is the basis of labor relations 
in this country. The parties should be left to settle their 
current impasse themselves without interference from Congress.
    I must also raise a parochial reason for opposing the bill: 
the future of the Pittsburgh Pirates. While the bill purports 
to preserve the antitrust exemption that allows major league 
baseball to block franchise relocations, the uncertainty that 
the bill would engender is likely to result in severe 
dislocations to the sport. In such an atmosphere, it is 
impossible to be certain that the Pirates would be retained in 
    S. 627 does nothing to solve the roiling labor issues in 
baseball. It will only serve to upset the current situation 
even further and can only make a labor agreement less likely, 
as all sides learn to deal with a new set of rules. Whatever 
the possible merits of this bill as antitrust policy, this is 
the wrong time for the Senate to adopt this bill.

                                                     Arlen Specter.

    In approving a repeal of major league baseball's 
longstanding antitrust exemption, this Committee has decided to 
alter the balance of power in an ongoing labor dispute between 
millionaires while the truly pressing problems facing our 
Nation remain unresolved. Congress should be devoting its time 
and resources to other matters rather than inserting itself 
into a controversy for which both sides deserve blame. Indeed, 
of the many labor disputes ongoing in America today, I can 
think of few, if any, that are less deserving of our attention 
than this one. The American people, who have consistently 
opposed government's interference in this area, agree.
    Not only does S. 627 reflect Congress' misplaced 
priorities, it is also unlikely to solve the problem it 
purports to address. Under two recent Federal appellate 
decisions interpreting the antitrust laws' so-called ``non-
statutory labor exception,'' 1 it appears that the 
antitrust laws are not applicable to the dispute between the 
players and the owners. Given that the baseball strike of 1994-
95 ended not because of any expected change in major league 
baseball's status under the antitrust laws, but because of the 
courts' application of our labor laws, S. 627 also appears 
unnecessary. In short, it is doubtful that S. 627 will do 
anything other than give the players an additional weapon in 
their broader, ongoing conflict with the owners.
    \1\ Brown v. National Football League, Inc., 50 F.3d 1041 (D.C. 
Cir. 1995); National Basketball Association v. Williams, 45 F.3d 84 (2d 
Cir. 1995).
    Finally, while I agree that baseball's antitrust exemption 
raises certain questions, we should also remember that in some 
ways, Congress may have more to learn from professional 
baseball than professional baseball has to learn from Congress. 
Of the four major professional sports in America, baseball has 
enjoyed by far the most franchise stability. While NFL fans 
from Cleveland and Houston--and perhaps other cities--are faced 
with the prospect of losing their beloved teams to other 
communities, and while this very Committee is studying 
antitrust legislation to prevent these moves, no baseball 
franchise has changed cities in over a quarter-century. Even 
assuming that baseball's work stoppages are a direct result of 
baseball's antitrust exemption--and we should remember that 
those major sports which do not enjoy an antitrust exemption 
have also experienced often-extended work stoppages in their 
own right--the problems created by the application of the 
antitrust laws to franchise relocation may be, in the minds of 
many loyal fans, even greater.
    S. 627 seeks to address this prospect by excepting 
franchise relocation issues from its coverage. Similarly, it 
attempts to deal with concerns about the effect of the bill on 
the minor leagues by excepting the minor leagues from its 
scope. Disputes regarding the scope and nature of these 
exceptions, however, will undoubtedly result in additional 
litigation--the outcome of which simply cannot be predicted. 
Indeed, the minor leagues oppose S. 627 despite the minor-
league exception, and it can safely be said that this 
legislation, at the very least, should make those concerned 
about sports franchise relocation very uncomfortable.
    The variety of problems facing our professional sports 
leagues demonstrates that even if professional baseball is a 
deserving subject of Congress's attention, such consideration 
should not take place on an ad hoc basis, in response to one 
``crisis'' or another, but should be part of an overall and 
careful reexamination of professional sports under the law. 
Only by studying the issue raised by S. 627 in this broader 
context can Congress avoid the justifiable criticism that it is 
simply playing favorites in a rancorous dispute that, but for 
the parties' stubbornness and lack of reason, should have been 
resolved long ago.

                                                        Paul Simon.

    In 1922, Justice Oliver Wendell Holmes determined that the 
game of baseball is not commerce to be regulated by the 
antitrust laws. Since that time, Congress and the courts have 
had ample opportunity, during good times and bad, to revoke 
that antitrust exemption. Proponents of this legislation argue 
that the baseball antitrust exemption, which has remained in 
place for 75 years, to the benefit of franchise stability and 
minor league support, despite repeated judicial and 
congressional inquiries, should now be lifted in the middle of 
an ongoing labor dispute.
    That argument is unconvincing for a couple of reasons. 
First, we need to acknowledge, just as the National Football 
League (NFL) has after suffering through a stunning number of 
franchise relocations, that there are times when, in the 
interest of the fans, professional sports teams must act as 
business partners instead of business competitors. For example, 
the Colorado Rockies and the San Francisco Giants need to agree 
on the size of the field and the rules of the game before they 
can successfully compete. Second, and more importantly, 
Congress should not, as a matter of principle, intervene in an 
ongoing labor dispute.

                 Baseball and the Interests of the Fans

    Before we jump to any conclusions about whether Baseball 
has abused its exemption from application of the antitrust 
laws, we should consider some of the facts:
          Baseball has a history of franchise stability that 
        must be the envy of the other major sports. In the past 
        year, the NFL had two franchises abandon the second 
        largest market in the United States: the successful Los 
        Angeles Raider franchise relocated from Los Angeles to 
        Oakland, and the Los Angeles Rams jumped to St. Louis. 
        The NFL also will apparently now lose the historic 
        Cleveland Browns franchise to Baltimore and the Houston 
        Oilers to Memphis. The Chicago Bears are threatening to 
        move to Gary, IN, while the Phoenix team (itself a 
        recent transplant from St. Louis) has talked of moving 
        again. In hockey, franchises continue to move 
        regularly. Even the NBA, which has gone through the 
        most popular era in its history after a decade of 
        problems, had the San Diego Clippers relocate to Los 
        Angeles. Baseball has not had a single relocation in 
        the past 25 years. On the contrary, the recent effort 
        of the San Francisco Giants to move was rejected by 
        Baseball and the Giants remained in San Francisco. 
        Contrary to the Oilers, at the urging of Baseball, the 
        Houston Astros decided not to pursue relocation but 
        instead redoubled their effects to be successful in 
        Houston. All of that was made possible by the 
        exemption, without which Baseball would be in the same 
        vulnerable position as the other sports. Given that 
        Baseball, more than any other sport, is steeped in 
        tradition and stability, unchecked franchise relocation 
        would be disastrous to the national pastime.
          Regarding the number of franchises, Baseball has kept 
        pace with the other major sports. In addition, Baseball 
        has already announced the addition of its 29th and 30th 
        franchises to begin play in Tampa Bay and Phoenix in 
        1998 and has under consideration the possibility of 
        adding two additional franchises before the year 2000.
          Despite the exemption, Baseball supports the minor 
        league system at a level of over $200 million per year. 
        Minor league baseball benefits hundreds of communities, 
        large and small, across the country. Relations between 
        the major and minor leagues are at an all time high. 
        The relationship is so inextricably intertwined that 
        any attempt to eliminate the exemption, upon which 75 
        years of cooperative dealings have been based, even 
        with an attempted carve out, will no doubt create 
        numerous points of contention. For instance, the 
        majority is clear that it is eliminating the exemption 
        with regard to labor relations. But more than 37 
        percent of the players on each team's major league 
        roster are actually playing in the minor leagues. 
        Despite this bill's attempt to except the minor 
        leagues, the potential for conflict is inherent and 

                   Civic Involvement With Home Teams

    Professional baseball and football are not like other 
businesses. They are not commodities like Coca-Cola or Post 
Toasties. Around baseball teams and football teams, perhaps 
more than anything else, there is a civic spirit and a civic 
commitment. Communities show this spirit in building stadiums 
and fixing up stadiums, which are very costly; in chamber of 
commerce support; civic lunches and receptions; and parades and 
other community celebrations.
    There is no business that has the kind of civic dimension 
that professional baseball and football have. The players are 
role models for children, spending time at recreation centers 
and schools, helping underprivileged youngsters. Employees of 
other companies do not do this to the same extent. Indeed, most 
teams have foundations which perform charitable and community 
activities, such as engaging in canned food drives, toys for 
tots campaigns, and raising money for causes such as children's 
hospitals, Special Olympics, and the March of Dimes. There are 
no companies which are so involved in the civic dimension of 
the community.

                Intervening in an Ongoing Labor Dispute

    The current bill intervenes in a continuing labor dispute. 
The majority report justifies this legislation on the basis 
that it ``would help resolve baseball's labor problems.'' This 
conclusion is dubious at best.
    The middle of an ongoing labor dispute is not the right 
time to change the rules of the game. Both President Clinton 
and his chosen mediator, William Usery, repeatedly stated that 
the problems of baseball should be decided at the negotiating 
table. But, every time this issue comes before Congress, the 
parties drop what they are doing, leave the negotiating table, 
and focus their efforts on legislation.
    Despite baseball's antitrust exemption, the Major League 
Baseball Players Association has been among the most successful 
unions in any industry in the history of this country. The 
average player's salary has grown to over $1 million per year, 
despite several teams have severe financial problems, according 
to Major League Baseball. Through negotiations, the Players 
Association has also gained from the owners, in addition to the 
exorbitant salaries, the elimination of the reserve system, and 
treble damages for any collusion among owners regarding free 
    Contrary to the proponents' suggestions, the courts are not 
always hostile to the baseball exemption. The two Federal 
courts which have addressed the exemption since the Piazza 
opinion cited by the majority expressly rejected Piazza and 
held that the exemption was both valid and expansive. New 
Orleans Pelicans Baseball, Inc. v. National Ass'n of 
Professional Baseball Leagues, Inc., No. 93-0253, 1994 U.S. 
Dist. WL 631144 (E.D. La. Mar. 1, 1994); McCoy v. Major League 
Baseball, No. C95-383D, 1995 U.S. Dist. Lexis 19858 (W.D. Wash. 
Nov. 2, 1995). The Butterworth case cited by the majority is a 
State court decision which contained no independent analysis 
and relied entirely on the reasoning of Piazza.
    Baseball is not the only enterprise with this regulatory 
status. Other industries have operated under regulatory schemes 
independent of the antitrust laws. Many will disagree with the 
suggestion by the majority that baseball is the only industry 
to claim an exemption without being subject to alternative 
regulatory supervision. Here are some illustrations:
          Fewer than 3 years ago, in the National Cooperative 
        Production Amendments Act of 1993, Congress conferred 
        broad protection from antitrust treble damages 
        liability on production joint ventures in any industry, 
        so long as they file notification with the Justice 
        Department. This legislation extended to production 
        joint ventures the same longstanding antitrust 
        protection previously accorded to research joint 
        ventures by the National Cooperative Research Act of 
          The Soft Drink Interbrand Competition Act of 1980 
        confers broad antitrust protection on the distribution 
        systems of soft drink producers, with no regulatory 
        supervision, so long as soft drinks face ``substantial 
        and effective competition.'' That act has been invoked 
        repeatedly and successfully to forestall antitrust 
          The Health Care Quality Improvement Act of 1986 
        protects doctors and other health care providers from 
        all damages liability under the antitrust laws for peer 
        review activities so long as those activities offer a 
        minimum of procedural due process.
    It is obvious that Baseball, like these other businesses, 
will not come crashing down if antitrust laws do not apply in 
the near future. Whereas, if we were to act now, it would be to 
take a position in an ongoing dispute. That should not be the 
role of Congress. Elimination of the antitrust exemption would 
not ensure labor peace--to the contrary, it would guarantee 
protracted, uncertain, and expensive litigation and would 
complicate matters further.

       The Exemption Is Unrelated to the 1994-95 Baseball Strike

    Proponents of the legislation suggest that all of the labor 
discord in Baseball can somehow be attributed to the existence 
of the exemption and that its elimination would be a labor 
panacea. Nothing could be further from the truth. In fact, all 
that its elimination would cause is unbridled litigation. In 
addition, the nonstatutory labor exemption would preclude an 
antitrust suit absent decertification in any event, so 
eliminating the exemption in the fashion contemplated would 
merely shift the fight from the current judicial exemption to 
the nonstatutory labor exemption.
    Despite the applicability of the antitrust laws to the 
other major sports, they too have had their own significant 
labor problems. The NFL went through 5 years of litigation and 
even played a portion of one season with replacement players. 
The National Hockey League (NHL) lost a significant part of 
last season and almost lost the entire season while the owners 
engaged in a lockout of the players. Although the National 
Basketball Association (NBA) has not lost any portion of a 
season as a result of a work stoppage, it did play the first 55 
days of this season with replacement referees.
    Following the proponents' logic that the antitrust 
exemption somehow created the labor controversy, we would have 
to assume there are other examples, aside from the strike, of 
labor disadvantage. Take a look at salaries: the NBA, the NFL 
and the NHL, which do not have an exemption, do have a form of 
salary restraint. Baseball, which has the exemption, does not 
have a salary restraint.
    By suggesting that the 1994 strike could have been averted 
if only the union had the ability to file an antitrust suit 
against the owners, supporters of the proposed legislation 
greatly overstate both the speed and effectiveness of antitrust 
legislation. Whatever else they may be, antitrust cases are 
uncertain, expensive, and above all, very time-consuming.
    As the majority concedes, before an antitrust suit could be 
filed, the union will still confront--as do the players in 
every other professional sport--the nonstatutory labor 
exemption from the antitrust laws, which derives from several 
Supreme Court decisions, most notably Connell Constr. Co. v. 
Plumbers & Steamfitters Local Union No. 100, 421 U.S. 616 
(1975). In order to bring an antitrust action against the 
owners, the players would first have to decertify their union 
to sever the collective bargaining relationship with the club 
owners. The players could then have to file suit and proceed 
through the typical morass that comprises current antitrust 
litigation. Only the NFL has proceeded down such a path, and 
that litigation took in excess of 5 years to resolve, with the 
final resolution not determinative.
    Although the majority report only discusses the repeal of 
baseball's antitrust exemption as affecting labor issues, it 
likely will have ramifications in other areas as well.

                          Disciplinary Action

    Dating all the way back to the Black Sox scandal of 1919, 
baseball has been able to effectively discipline its own 
personnel. However, the exercise of this power has been 
challenged on antitrust grounds. For example:
          When the Executive Council of Major League Baseball 
        suspended Cincinnati Reds owner Marge Schott for 
        racially and ethnically insensitive remarks, Ms. Schott 
        argued that without the antitrust exemption her 
        suspension would be considered an illegal group boycott 
        violative of antitrust laws. Schott made it clear that 
        without an antitrust exemption, every league suspension 
        could be challenged in court.
          When baseball Commissioner Bowie Kuhn disapproved the 
        assignments of three player contracts after their sale 
        by Oakland Athletics owner Charles Finley, the 
        Athletics commenced an action in federal court claiming 
        violations of antitrust laws.
    Other sports have also been subjected to antitrust 
challenges for protecting the integrity of their games:
          When professional golfer Jane Blalock was suspended 
        by the Ladies Professional Golf Association for 
        allegedly cheating, she retaliated against the league 
        by commencing an antitrust challenge.
          When professional bowler Ralph Manok was suspended 
        for cheating by his bowling association, he too 
        responded by instituting antitrust litigation.
          When NBA star Jack Molinas was indefinitely suspended 
        for gambling, he sued the league on antitrust grounds.
    Removing baseball's exemption could well open the 
floodgates to further challenges to Baseball's important 
ability to protect the integrity of the game.

                            Equipment Deals

    Eliminating the antitrust exemption could also subject 
Major League Baseball to challenges of exclusive contracts that 
it has established with equipment manufacturers. Although the 
exclusive equipment deals help to maintain the uniformity of 
the game, every new contract would carry the risk of an 
antitrust challenge. Antitrust challenges against other sports 
leagues illustrate just some of the types of costly and 
counterproductive court battles baseball could face if the 
exemption is lifted:
          When the PGA banned the use of golf clubs with 
        certain U-shaped grooves on the professional tour, a 
        golf club manufacturer sued, alleging that the ban was 
        an unlawful boycott and restraint on competition in 
        violation of antitrust laws.
          The United States Tennis Association, which banned 
        double-strung racquets from the professional tour, was 
        subjected to a lengthy antitrust challenge by a tennis 
        racquet manufacturer before the court ruled in the 
        USTA's favor.
          In another golf case, a golf shoe manufacturer sued 
        the USGA on antitrust grounds, alleging that a USGA 
        determination that a certain golf shoe did not conform 
        to a USGA rule violated antitrust laws.
    It is clear from past examples of lawsuits--both within and 
outside of Major League Baseball--that Major League Clubs could 
face a storm of new antitrust challenges if the exemption is 
lifted. While it is impossible to say for certain whether any 
or all of these challenges would succeed, it is important not 
to underestimate the chilling effect of potentially costly and 
time-consuming antitrust litigation, which will only be 
encouraged by this legislation.


    The important consideration here is the fans. Our first 
priority ought to be to protect them. Ending a baseball season 
is unacceptable; so too is franchise relocation; so too is 
terminating support of the minor leagues. To accommodate these 
interests, our sports teams are going to have to act as 
business partners at times. As even the proponents concede, the 
exemption serves a useful function in some areas: franchise 
stability, the relationship with the minor leagues, certain 
broadcast matters. To act now in the middle of an ongoing labor 
dispute would be counterproductive. As a matter of principle, 
Congress ought to stay out of this continuing labor dispute.

                                   Hank Brown.
                                   Dianne Feinstein.

    In addition to the joint views I have filed with Senators 
Brown and Heflin, I write separately to add some personal 
views. As the former mayor of a city with two professional 
sports franchises, baseball's Giants and football's 49ers, I 
had to fight to keep baseball in San Francisco, and I know 
firsthand that the only reason the Giants didn't leave San 
Francisco was baseball's antitrust exemption. The need to 
maintain franchise stability, which baseball's antitrust 
exemption clearly does--no Major League Baseball team has 
abandoned its city for another since the Washington Senators 
left the Nation's Capital for Texas almost 25 years ago--is the 
overriding reason that I have consistently opposed repeal of 
the exemption, and will do everything in my power to see that 
this bill does not pass.
    Moreover, I believe that baseball's antitrust exemption, 
far from being repealed, should be extended to other major 
professional sports. As we state in the joint views, these 
teams, too, are integral parts of their communities, and their 
fans and hometowns deserve the same protections which baseball 
fans enjoy. Thus, I intend to introduce legislation which will 
extend the exemption to other sports.

                                                  Dianne Feinstein.
                      XIV. Changes in Existing Law

    In compliance with paragraph 12 of Rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 627, as reported, are shown as follows (existing law which 
would be omitted is enclosed in bold brackets, new matter is 
printed in italics, and existing law in which no change is 
proposed is shown in roman type):

                           UNITED STATES CODE

          * * * * * * *

                      TITLE 15--COMMERCE AND TRADE

          * * * * * * *


Sec. 12. Words defined; short title

    (a) ``Antitrust laws,'' as used herein, includes the Act 
entitled ``An Act to protect trade and commerce against 
unlawful restraints and monopolies,'' approved July second, 
eighteen hundred and ninety; sections seventy-three to seventy-
seven, inclusive, of an Act entitled ``An Act to reduce 
taxation, to provide revenue for the Government, and for other 
purposes,'' of August twenty-seventh, eighteen hundred and 
ninety-four; an Act entitled ``An Act to amend sections 
seventy-three and seventy-six of the Act of August twenty-
seventh, eighteen hundred and ninety-four, entitled `An Act to 
reduce taxation, to provide revenue for the Government, and for 
other purposes,' '' approved February twelfth, nineteen hundred 
and thirteen; and also this Act.
          * * * * * * *
    Sec. 27. (a) Subject to subsection (b), the antitrust laws 
shall apply to the business of professional major league 
    (b) Nothing in this section shall be construed to affect--
          (1) the applicability or nonapplicability of the 
        antitrust laws to professional baseball's amateur 
        draft, the minor league reserve clause, the 
        Professional Baseball Agreement, or any other matter 
        relating to the minor leagues;
          (2) the applicability or nonapplicability of the 
        antitrust laws to any restraint by professional 
        baseball on franchise relocation; or
          (3) the application of Public Law 87-331 (15 U.S.C. 
        1291 et seq.) (commonly known as the Sports 
        Broadcasting Act of 1961).
          * * * * * * *